OFFICE OF THE ASSISTANT SECRETARY OF DEFENSE

 3500 DEFENSE PENTAGON

 WASHINGTON, DC 20301-3500

 SUSTAINMENT

MEMORANDUM FOR SUPPLY PROCESS REVIEW COMMITTEE

SUBJECT: Approved Defense Logistics Management Standards Change 1437, Update 

Inventory Control Adjustment Process by Storage Location by Defense Logistics 

Agency (Supply)

The Defense Logistics Management Standards change, as outlined in the attachment, is 

approved for implementation.

Addressees may direct questions to Dr. Gail Fuller, DEDSO.Supply@dla.mil. Others 

must contact their designated PRC representative available at https://www.dla.mil/Defense-DataStandards/Committees/Contacts/.

 Leigh E. Method, SES

Deputy Assistant Secretary of Defense 

 for Logistics

Attachment

As stated

cc:

OUSD(C)

DLA J6DS
Attachment, ADC 1437

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Approved Defense Logistics Management Standards Change 1437

Update Inventory Control Adjustment Process by Storage Location by 

Defense Logistics Agency (Supply)

1. ORIGINATING SERVICE/AGENCY AND POC INFORMATION: 

a. Technical POC: Defense Enterprise Data Standards Office (DEDSO), Dr. Gail 

Fuller, DEDSO.Supply@dla.mil.

b. Functional POC: Defense Logistics Agency (DLA), Logistics Operations (J3), Troy 

Brown, troy.brown@dla.mil. 

2. REASON FOR CHANGE: 

a. Bottom Line Up-Front: Substantive updates made after approved change are 

identified in green highlighting. 

This change clarifies specific reporting for the DLA conducting, recording, and reporting process

articulated in Defense Logistics Manual (DLM) 4000.25, Volume 2, Chapter 6, Physical 

Inventory Control when performing storage bin counts; the DLA Warehousing Management 

System (WMS) will report location variations as locations are counted via the DLMS 947I 

Inventory Adjustment.

b. Background: 

(1) The Department of Defense (DoD) has adopted an annual physical inventory 

count process using either a cycle count or wall-to-wall count methodology, as outlined in DoD

Instruction (DoDI) 4140.73. This change, as well as audit findings, have highlighted the need to 

dramatically increase the frequency of inventory counts for DLA. The increase in inventory 

count frequency has resulted in additional resources required at the DLA Distribution Centers. 

DLA is in the process of migrating to WMS. One of the existing capabilities in WMS is the 

ability to schedule and complete inventories by bin/location. As part of the functionality, WMS 

will transmit the result of the physical inventory count as locations are counted as opposed to 

waiting until the total population for a line-item is counted. 

(2) Today in DLA Distribution Standard System (DSS), the gain and loss may 

not be transmitted immediately after it’s discovered, and it can be delayed up to 30 days. This 

occurs since DSS requires a complete count of line-item population prior to adjustment report.

(3) Accordingly, DLA wants to take advantage of the capability in WMS to

accomplish inventory counts by location. This bin/location count capability will allow a more 

sequential and efficient count process and enables DLA to report gains and losses closer to when 

those adjustments are discovered. 

3. CHANGE IN DETAIL: 

a. Technical Details: None.

b. Revised Transaction Flow: No changes to the transaction flow. However, materiel 
Attachment, ADC 1437

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owners may receive multiple DLMS 947I Inventory Adjustment transactions for the same lineitem as locations are counted in lieu of a single adjustment after the entire population is counted. 

Materiel owners will need to evaluate their respective accounting property systems of records 

and determine any impact.

4. IMPLEMENTATION TARGET: Upon approval. 

5. TECHNICAL IMPACT: 

a. Additions or Changes to Data Elements: None.

b. Automated Information Systems (AIS): None.

c. Defense Automatic Addressing System (DAAS): Not applicable.

6. PUBLICATION/POLICY IMPACT: 

a. Defense Logistics Manual (DLM) 4000.25: Volume 2, Chapter 6, Physical 

Inventory Control.

b. Non-DLM 4000.25 Publications: DoD Components may need to update internal 

guidance to comply with this DLMS change.

7. ASSUMPTIONS: None noted.

8. FINANCIAL IMPROVEMENT AND AUDIT REMEDIATION (FIAR), MATERIAL 

WEAKNESS, AND AUDIT-RELATED INFORMATION: 

a. Notices of Findings and Recommendations (NFR): None.

b. Corrective Action Plan (CAP) References: None.

c. Other FIAR, Material Weakness, and Audit-Related Information: None. 

9. END-TO-END TESTING REQUIREMENTS: None.

10. REFERENCES:

a. DoDI 4140.73, Asset Physical Accountability Policy

b. DLM 4000.25, Volume 2, Chapter 6, Physical Inventory Control

11. PROPOSED DLMS CHANGE (PDC) 1463 RESPONSE/COMMENT RESOLUTION:

Component Response/Comment Disposition 

1. DLA Concur with Comments. DEDSO response: 

Acknowledged comments 

additions are shaded in green.

2. US Air Force Concur with Comments.

1.Currently, DLA manages Robins, Ogden and OKC at 

the retail level using ILS-S as the APSR. Will the 

DEDSO response: 

Acknowledged system 

implementation. DLA 

responded stating that DLA 
Attachment, ADC 1437

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Component Response/Comment Disposition 

implementation of ADC 1437 impact the use of the 947I 

at these retail locations or is this change only on the 

wholesale side of the house?

will count at bin level where 

we use WMS. If the USAF is 

using ILL-S, they can count 

however they feel is 

necessary. DLA just wants to 

be able to count at bin level 

vice NIIN level.

Both Wholesale and Retail 

will count at bin level. The 

adjustments will post as each 

count is completed (after a 

recount and review at the 

difference analyzer level).

This change should not 

adversely impact a 

customer. The adjustments 

will be processed quicker.

3. US Army No response. DEDSO Response:

No response represents 

concurrence per PDC 1437 

change memo.

4. USMC Concur with comments. 

1. Inventory by Location and Spot Inventory: 

The focus here is addressing inventory inaccuracies in 

specific locations. Spot inventory is mentioned as a 

solution for such cases. This could be effective for 

quickly addressing discrepancies in specific areas rather 

than a full-scale inventory. 

2. Serialized and Non-Serialized Inventory: 

The PDC doesn’t explicitly address whether the 

inventory process is tied to serialized or non-serialized 

inventory. Some Service APSRs track assets by serial 

number. Due to constraints in the Unique Identification 

Tracking (UIT) process, not all NIINs are being tracked 

at DLA by serial number. 

3. Bulk Location and Owning-RIC Level: 

If an inventory was conducted on a bulk location, that 

has not been segregated to the owning-RIC level, how 

do you know which owning-RIC should take the 

adjusted, and to what quantity level? This raises a 

critical question about how to allocate adjustments from 

an inventory conducted on a bulk location that hasn't 

been segregated to the owning-RIC level. Determining 

DEDSO Comments:

Acknowledged system 

implementation. DLA 

responded as follows:

1. Within WMS, DLA counts 

by bin location for all assets, 

serialized items and nonserialized items. DLA 

Distribution pulled some 

adjustment data from WMS at 

the (2) DLA Distribution 

centers which provides 

primary support to USMC 

(Albany and Barstow).

2. If materiel is a UIT serial 

number item and during the 

first count there is a serial 

number discrepancy but not a 

quantity discrepancy, the 

serial number adjustment will 

go to the Difference Analyzer 

for research and review. If a 

recount or other bin locations 

need to be inventoried, those 
Attachment, ADC 1437

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Component Response/Comment Disposition 

the correct owning-RIC and quantity level is essential 

for accurate inventory management. 

4. Risk of Removing Service Owned Assets: 

Conducting inventory by location for serialized items 

without a wall-to-wall methodology is flagged as a risk. 

Prematurely removing service-owned assets elsewhere 

in the DLA site's inventory could have significant 

financial implications. 

5. Recommendation for Adding a New Field: 

If an inventory were conducted by location vice by a 

wall-to-wall methodology, and the NIIN being 

inventoried is serialized, there is a risk in prematurely 

removing Service owned assets that are located 

elsewhere in the DLA site’s inventory. The 947I 

(D8*/D9*) is by serial number and can carry a large 

dollar value. 

6. Recommend adding a new field that further 

explains why and which methodology was utilized: 

AA = Physical inventory count as a result of a Wall-toWall inventory (D8/D9 “A”) 

AB = Accounting Error (D8/D9 “B”) 

AH = Other, miscellaneous (D8/D9 “Z”) 

AJ = Survey (Theft, Shelf Life) (D8/D9 “G”) 

AL = Inventory adjusted due to a location survey 

(D8/D9 “A”) 

AN = Unit of issue Change (D8/D9 “B”)

locations can be scheduled for 

a count.

3. Currently, all locations 

(including bulk locations) are 

segregated by owner in DSS 

and WMS with the exceptions 

of the (3) Air Logistics 

Centers (ALCs) at Hill, 

Oklahoma, and Warner. 

Adjustments will be applied 

to the owner and not prorated. 

4. DLA transmits the 

following error codes: AA, 

AM, and AQ. DLA uses 947I 

for kitting adjustments.

5. There is no need to add an 

additional field. This risk is 

out of the scope of this 

change.

6. This information is already 

annotated in Chapter 7, T1.

7. US Navy Concur with comments. Navy response: This has no 

impact to the current Navy ERP business rules. If the 

Navy ERP becomes the APSR, this one should be 

reviewed during implementation.

Acknowledged if Navy ERP 

becomes the APSR, ADC

will be reviewed at that time.

8. DAAS Concur without comments. With this change having no 

technical impact, DAAS concurs with this ADC as 

written.

DEDSO Acknowledges.

9. USTRANSCOM Abstain. DEDSO Acknowledges.

10. FAA Abstain. DEDSO Acknowledges.
Enclosure 1, ADC 1437

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Enclosure 1

Update Defense Logistics Manual (DLM) 4000.25, Volume 2, Supply Standards and Procedures

Make the following change to Volume 2. Additions are identified by bold red italics and 

deletions by double strikethrough text. 

 Chapter 6 Physical Inventory Control

Preceding text not shown.

C6.3.6.9. Reporting Adjustments by Location Count. DLA Distribution 

Center Storage Activities may report inventory adjustments as they are 

discovered via the DLMS 947I Inventory Adjustment transaction. Using this 

method allows a storage activity to report as warehouse locations are counted 

instead of waiting to count the entire population of a line-item.